The Central Bank of Nigeria (CBN) has initiated a sweeping regulatory action, revoking the operational licenses of over 4,000 Bureau De Change (BDC) operators across the country. This bold move by the apex bank comes as a response to the failure of these entities to adhere to essential regulatory guidelines.
The decision was disclosed in a statement signed by the Director of Corporate Communications at the CBN, who emphasized the regulatory authority vested in the apex bank under the Bank and Other Financial Institutions Act (BOFIA) 2020, Act No. 5, and the Revised Operational Guidelines for Bureau De Change 2015, to take such actions.
The statement detailed the specific breaches committed by the affected BDCs, including non-payment of required fees within stipulated timelines, failure to render returns as mandated by guidelines, and non-compliance with directives and circulars issued by the CBN, particularly those relating to Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT), and Counter-Proliferation Financing (CPF) regulations.
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
“The Central Bank of Nigeria (CBN), in exercise of the powers conferred on it under the Bank and Other Financial Institutions Act (BOFIA) 2020, Act No. 5, and the Revised Operational Guidelines for Bureau De Change 2015 (the Guidelines), has revoked the licenses of 4,173 Bureau De Change Operators,” the statement read.
Furthermore, the CBN has made public the list of the affected BDCs on its official website (www.cbn.gov.ng), urging the public to take cognizance of this development.
In response to inquiries, the CBN provided further clarity on its actions, stating, “The affected institutions failed to observe at least one of the following regulatory provisions: Payment of all necessary fees, including licence renewal, within the stipulated period in line with the Guidelines; Rendition of returns in line with the Guidelines; Compliance with guidelines, directives and circulars of the CBN, particularly Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT) and Counter-Proliferation Financing (CPF) regulations.”
This regulatory clampdown follows the introduction of a draft guideline by the CBN aimed at strengthening the operations of BDCs nationwide. Key provisions introduced include the imposition of a minimum share capital requirement of N2 billion for Tier-1 BDCs, restrictions on cash transactions (capped at $500), and a $10,000 annual limit for school fee transactions, among others.
Under the new guideline, the CBN approved the sale of foreign exchange to eligible BDCs to cater to the demand for invisible transactions. Each BDC is entitled to purchase $20,000 at a fixed rate of N1,301/$.
“The CBN has approved the sale of foreign exchange to eligible BDCs to meet the demand for invisible transactions. The sum of $20,000 is to be sold to each BDC at the rate of N1,301/$1,” the circular introducing the guideline noted. “All BDCs are allowed to sell to end-users at a margin NOT MORE THAN one percent (1%) above the purchase rate from CBN.”
With the revocation of licenses for 4,173 BDCs, only 1,517 licensed operators remain across the country. This move is expected to streamline operations within the BDC sector and ensure better compliance with regulatory frameworks. Additionally, it will lead to a more efficient allocation of resources by the CBN, as it implements its weekly supply of foreign exchange to BDCs, amounting to $30.34 million based on the approved rate and number of licensed operators.